July 19, 2022
Projects

In The Press – The house prices that are still rising: How inflation is blowing out building costs

News & Insights
Written by Tawar Razaghi for The Age.
“It’s been a rollercoaster … two years ago, contracts were being terminated because everybody thought they would lose their job. All of a sudden, JobKeeper and HomeBuilder came along and people weren’t travelling, the building industry went from no work to too much work,” Wawn said.
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Property prices may be falling for the established housing market, but new homes are bucking the trend and have become the canary in the coal mine, as far as inflation goes.

Almost every category of building materials has become more expensive. Steel products are leading the way, jumping 42.1 per cent in the year ending March 2022, Australian Bureau of Statistics figures show.

It was followed by timber, board and joinery, which jumped 20.6 per cent in the same period.

The soaring costs are a sharp turnaround and at odds with the falling prices of established housing market thanks to the sheer two-year strong demand for new homes, in the face of ongoing limits on materials and labour to build a house.

It all began when the majority of households pumped almost any spare dollar into their homes where they bunkered down once they realised they could hold on to their jobs during the pandemic and government support in the form of JobKeeper flowed through, as well as spending initiatives such as HomeBuilder.

As a result, the residential construction industry became the canary in the inflationary coal mine, according to Denita Wawn, chief executive of Master Builders Australia.

“It’s been a rollercoaster … two years ago, contracts were being terminated because everybody thought they would lose their job. All of a sudden, JobKeeper and HomeBuilder came along and people weren’t travelling, the building industry went from no work to too much work,” Wawn said.